IBM will acquire HR software provider Kenexa in a deal worth US$1.3 billion, the firm announced this week. The acquisition will increase IBM's competition in the recruitment software market taking advantage of Kenexa’s Cloud-based technology and consulting services. In Q1 2012, IBM acquired Emptoris, a contract management software company whose service portfolio includes a vendor management system for contingent labour.

Kenexa’s share price jumped by 42.4% after the acquisition was made public yesterday and comes after it recently acquired OutStart, Inc., a provider of social business software and learning systems. Kenexa operates globally and supports more than 8,900 customers across a variety of industries, including financial services, pharmaceuticals, retail and consumer. It offers recruitment process outsourcing services and applicant tracking software amongst other employee management software services.

IBM expects the transaction to close in the fourth quarter of the year.

“The Kenexa acquisition will complement IBM's social business and HR business services leadership,” IBM said. Analysts suggest that the acquisition is a big step and makes clear that IBM is keen to take on competitors such Oracle, SAP and Salesforce.com.